Last Coronavirus: New York, New Jersey, and Connecticut will end up with the most Covide restrictions

Growth in the U.S. manufacturing sector slowed to a 37-year high last month amid a shortage of parts to meet strong demand from manufacturers and rising commodity prices.

The Institute for Supply Management said on Monday that the index for measuring manufacturing activity had dropped to 60.7 from a reading of 64.7 in March, which was the highest growth rate since December 1983.

Economists were looking to accelerate growth in April, estimating that the ISM index would rise to 65.

The shortage of semiconductors and other parts has wreaked havoc on supply chains, and manufacturers have thrown the key to meeting demand, as the decline in vaccine and coronavirus cases is driving the U.S. economy to a rebound.

Factories have also seen a rise in the prices of various materials. Prices for monitoring the index paid by ISM survey manufacturers rose four points to 89.6, the highest reading since July 2008.

Timothy Fiore, chair of the ISM manufacturing business survey committee, said team members “reported that their companies and suppliers continue to struggle to increase demand rates because of the impacts that limit the availability of parts and materials for coronavirus (Covid-19).”

“Last registration periods, large shortages of critical basic materials, rising commodity prices and difficulties in transporting products continue to affect all segments of the manufacturing economy,” he said.

The shortage of parts, absenteeism of workers and temporary production stoppages caused by the challenges of filling open jobs have also limited potential growth in the sector, according to Fiore.

However, business optimism has improved over the month as demand has risen, hiring has risen for the fifth month in a row and demand portfolios have continued to grow at record levels.

Analysts at Oxford Economics said the report’s details were “generally gratifying”.

“Manufacturing remains resilient, and factories will not run out of gas once demand moves away from services and goods. Looking ahead, replenishing inventories, increasing capital investment, tax incentives and stimulating global growth will boost intense manufacturing activity,” they added.